I Split $20,000 Across 3 TSX Stocks for $715 a Year in Passive Income: Here Are the Picks

In today’s inflationary environment, a reliable stream of passive income can help investors manage rising living costs and maintain their financial stability. Quality dividend-paying stocks can help achieve this goal, offering investors the potential to earn regular income while benefiting from long-term capital appreciation.

Against this backdrop, I believe the following three dividend stocks are worth considering for investors seeking a combination of income and wealth creation. An equal allocation of $20,000 across these stocks could generate approximately $715 in annual dividend income at their current yields. Let’s examine what makes these three stocks attractive.

TC Energy

TC Energy (TSX: TRP) is a diversified energy infrastructure company that transports natural gas across North America through an extensive pipeline network and operates power-generation facilities with a combined capacity of 4.7 gigawatts. Its long-term take-or-pay contracts and power purchase agreements provide predictable revenue and cash flows, supporting 26 consecutive years of dividend growth. The company currently pays a quarterly dividend of $0.88 per share, for a forward yield of 4%.

Looking ahead, TC Energy is expanding its infrastructure to capitalize on rising natural gas production and growing demand for reliable energy transportation across North America. Its approximately $20 billion development pipeline provides a solid foundation for future growth. With these investments, management expects adjusted EBITDA to reach $12.6 billion to $13.1 billion in 2028, implying annualized growth of about 5.4%.

With its resilient business model, visible growth pipeline, and favourable long-term industry trends, TC Energy appears well positioned to strengthen its financial performance and sustain dividend growth. I believe the stock is worth considering for income-seeking investors looking for a combination of reliable dividend income and long-term growth potential.

Bank of Nova Scotia

Bank of Nova Scotia (TSX: BNS) offers a diversified range of financial services across multiple markets, broadening its revenue base and supporting relatively stable earnings and cash flows through different economic conditions. This resilience is reflected in its long-standing dividend record, with the bank paying dividends uninterruptedly since 1833. Its current quarterly dividend of $1.14 per share translates into an attractive forward yield of 3.5%.

Meanwhile, elevated oil prices could sustain inflationary pressures and keep central banks cautious on monetary policy. Although higher interest rates may increase borrowing costs, they could also support Scotiabank’s lending income by improving net interest margins, depending on deposit costs and competitive pressures. The bank is also sharpening its strategic focus by expanding its more profitable North American operations while scaling back riskier, less profitable businesses in Latin America. Additionally, it recently increased its share repurchase plan from 15 million to 40 million shares. If fully executed, the expanded program could reduce its outstanding share count by approximately 3.3%, potentially supporting earnings per share and enhancing shareholder returns.

With its strong dividend history, attractive yield, and ongoing efforts to improve profitability, Scotiabank could appeal to income-seeking investors looking for a combination of dividend income and long-term potential for shareholder returns.

Canadian Natural Resources

My final pick is Canadian Natural Resources (TSX: CNQ), which has increased its dividend for 26 consecutive years at an annualized rate of more than 20%. The company operates large, low-risk, high-value reserves that require relatively modest capital reinvestment. Combined with efficient operations, this helps keep costs low and supports strong profitability and healthy cash flows. This financial strength has enabled CNQ to deliver consistent dividend growth. The company currently pays a quarterly dividend of $0.63 per share, for a forward yield of 3.3%.

Amid ongoing geopolitical tensions, elevated oil prices could continue to benefit energy producers such as CNQ. The company is also investing approximately $7.6 billion in capital expenditures this year, having already spent $4.4 billion in the first half. These investments could support higher production, with management projecting average annual output of 1.637 million to 1.682 million barrels of oil equivalent per day (boe/d). The midpoint of this range represents approximately 5.7% year-over-year growth.

Furthermore, CNQ’s substantial reserves of approximately five billion barrels of oil equivalent and a reserve life of nearly 30 years provide a solid foundation for sustained production and long-term cash flow generation. With low-cost operations, expanding production capacity, and extensive reserves, the company appears well-positioned to sustain dividend growth, making it an attractive option for income-seeking investors.